The Canadian Real Estate Association reports monthly housing sales numbers for July on Tuesday, but it’s the national association’s long-term forecast that may provide greater clues into the state of the Canadian housing market.
The housing market has been climbing steadily since the end of the recession, with market watchers constantly worried about a crash. CREA has said that sales and prices may ease slightly in the coming year, but past forecasts have maintained that, over all, the market is healthy.
While July’s housing numbers are expected to show a minor decline in sales, observers who have seen early reports from regional markets are trying to figure out whether a dip in prices reflects a seasonal weakness or will prove to be a signal the market is cooling.
Several factors could see CREA lowering its sales projections for the rest of the year. Fears about the debt crisis in Europe and a possible double-dip recession in the United States could keep Canadians from buying new homes until things settle. That may be what happened in Vancouver and Toronto in July, where sales fell more than 20 per cent compared with June, despite record low interest rates.
The association, representing some 100,000 real estate agents across Canada, updates its sales forecast quarterly. The May forecast predicted a decline of 1.3 per cent to 441,100 units in 2011 compared with last year.
Despite the pressures, most bank economists expect Canadian house prices to hold steady for the next year, even as sales moderate.
“One of the more surprising aspects of the Canadian economy right now is just how well the housing market has been doing,” said Robert Kavcic, economist at BMO Nesbitt Burns Inc. “Interest rates are still extremely low and the job market has held up well in Canada, contributing to the relatively strong housing market.”